FCNR(B) deposit rates jump to 7% after RBI 2026 window

What changed in the FCNR(B) market

Indian banks have raised interest rates on Foreign Currency Non-Resident (Bank), or FCNR(B), deposits within days of the Reserve Bank of India (RBI) announcing a special window aimed at boosting foreign exchange inflows and stabilising the rupee. The move has triggered a rapid repricing of dollar deposit offerings, particularly in the three-to-five-year maturity bucket. Several lenders have lifted rates to the 6-7% range, and some have moved beyond 7% on select tenors.

Earlier, banks typically offered around 3.0-4.0% on FCNR(B) deposits, according to the information provided. The sharp shift in pricing reflects how the RBI’s latest measures changed the economics for banks, allowing them to pass on benefits to depositors.

RBI’s special swap window and the key incentives

The RBI’s measures include a special FCNR(B) swap window that lets banks raise FCNR(B) deposits and swap the proceeds into rupees at zero hedging cost. The facility is described as operational between June 8 and September 30, 2026, for tenors of three to five years. Separately, the provided details also mention a special scheme window running from June 18 to September 30.

The deposits mobilised under the special scheme are also exempt from cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements. Together, these changes lower the cost for banks of raising foreign currency funding and encourage lenders to raise rates to attract incremental NRI deposits.

How banks reacted: rates up by 200-300 basis points

Banks across the sector responded quickly. The material provided states that lenders have raised FCNR(B) rates by 200-300 basis points, moving headline rates to 6-7% and passing on the hedging benefit to depositors.

The RBI’s action is also described as absorbing the entire hedging cost on these deposits, estimated at around 3.5%. With hedging costs reduced or removed under the facility, banks gained headroom to offer substantially higher yields while staying within regulatory limits.

Public sector banks: SBI, PNB and Bank of Baroda reprice

State-owned Punjab National Bank (PNB) is now offering 6.0-6.10% per annum for three-to-five-year FCNR(B) deposits. The bank also plans preferential rates on a negotiated basis for deposits of $1 million and above.

State Bank of India (SBI) has also raised FCNR(B) rates, offering up to 6% on FCNR(B) deposits. As per the details shared, SBI increased FCNR dollar deposit rates by 230-265 basis points to 5.25-6.00% for three-to-five-year deposits. SBI also introduced the FCNR(B) Advantage Deposit Scheme, which outlines rate tiers up to $1 million and higher rates for deposits above $1 million.

Bank of Baroda (BoB) revised FCNR(B) rates across major foreign currencies. Under its scheme, customers can earn up to 6% on USD deposits, 4.75% on GBP and AUD deposits, 5.15% on CAD deposits, and 3.75% on Euro deposits, as stated in a press release.

Private banks step up: HDFC Bank, Kotak, ICICI and Yes Bank

HDFC Bank raised FCNR(B) rates to 6% from 3.40-3.65% earlier for similar three-to-five-year maturities. The hike was stated to be effective June 10, 2026, and applicable to deposits booked between June 10, 2026, and September 30, 2026.

Kotak Mahindra Bank’s website-listed FCNR(B) rates, effective June 11, include 6% for three-to-five-year deposits below USD 1 million and 6.15% for deposits above USD 1 million.

ICICI Bank stated on its website that it is offering 6.50% interest on NRI fixed deposits effective June 11, following the RBI’s announcement of the swap window.

Yes Bank is offering interest rates in the 6.50-6.60% range for such deposits, underscoring that some private lenders are pricing above public sector peers.

Smaller banks turn most aggressive: AU SFB and Karur Vysya

AU Small Finance Bank emerged as one of the most aggressive players, offering as much as 7.10% on select USD deposits. The bank increased its peak USD FCNR(B) rate to 7.10% from 5.15%, effective June 10, 2026. It raised the USD FCNR(B) rate from 5.15% to 7.10% for deposits with maturities between three and four years, and also offers 7% on four- and five-year deposits.

Karur Vysya Bank raised its peak rate by over 300 basis points to 7% for three-to-five-year deposits, according to the information provided.

Regulatory ceiling and the implied cap on pricing

The RBI has allowed banks to price these deposits as per internal policies, within an overall regulatory ceiling. Banks are allowed to offer up to 350 basis points above the foreign currency benchmark rate. One of the updates notes that this suggests a cap of around 7.13% based on the prevailing Secured Overnight Funding Rate (SOFR) for dollars.

This framework helps explain why many revised offerings cluster around the 6-7% band, with a few touching the 7% area.

Snapshot: bank-wise FCNR(B) rates and key conditions

Market impact: why this matters for funding and liquidity

The immediate impact has been a sector-wide jump in FCNR(B) rates, with multiple banks repricing within a narrow time window after the RBI’s announcement. With the RBI absorbing hedging costs and granting CRR and SLR exemptions on incremental deposits under the scheme, banks can treat FCNR(B) mobilisation as relatively cheaper foreign currency funding than before.

This has intensified competition for NRI dollar deposits, especially in the three-to-five-year segment that qualifies under the special window. The provided information also notes banks are seeking to diversify funding sources and strengthen liquidity, which helps explain why both large lenders and smaller banks have moved quickly.

Analysis: what to watch through September 30

The story is now centred on how far individual banks will push pricing within the regulatory ceiling and how long promotional schemes remain open. The key date is September 30, 2026, which is repeatedly cited as the end of the special window and bank-specific rate applicability periods.

A practical marker for readers is the clustering of revised rates: many large banks are around 6%, while select lenders have crossed 7% on certain USD tenors. Another important detail is the segmentation by ticket size. Several schemes explicitly offer better terms for larger deposits, including the $1 million and above category.

Conclusion

RBI’s FCNR(B) swap window has quickly reshaped the NRI deposit market, with banks lifting three-to-five-year USD deposit rates from the earlier 3-4% zone to roughly 6-7%, and in some cases above 7%. The window’s key features include zero hedging cost for eligible swaps, plus CRR and SLR exemptions on incremental deposits raised under the scheme. The next major checkpoint is September 30, 2026, when the special facility and multiple bank-specific promotional periods are set to end.